Infineon Will Pay $46.8M To Settle Rambus Suit

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Rambus Inc. said that it has settled its claims against DRAM manufacturer Infineon in return for licensing fees that could run just under $149 million.

The agreement will settle all of the conflicting patent claims raised by both sides, a dispute that dates back to August 2000. Under the terms of the settlement, Infineon will pay Rambus quarterly license fees of $5.85 million for a period of two years, beginning in November, for a total of $46.8 million. An additional clause allows Rambus to charge Infineon an additional $100 million under certain licensing conditions.

The terms of the settlement grant Infineon a fully-paid perpetual license to all of the Rambus memory interfaces, which by definition would include its latest XDR XDR memory technology. Infineon was also granted an option to acquire “other licenses,” most likely the FlexIO interconnect technology used in conjunction with the IBM-Toshiba-Sony “Cell” processor.

The agreement also requires Infineon to pay additional licensing fees “if Rambus enters into additional specified licensing agreements with certain other DRAM manufacturers,” Rambus said in a statement. In that case, Infineon would be required to make additional quarterly payments up to a maximum of an additional $100 million.

A spokeswoman for Rambus declined to clarify the clause, or indicate what DRAM manufacturers the agreement referred to.

In a conference call held Monday, however, company executives said the agreement should not be held up as an example. “We are satisfied with the terms and that they are in the best interest of our shareholders,” said Harold Hughes, the chief executive of Rambus.

“Most importantly, the terms of this agreement should not be extrapolated to future agreements with other companies and are unique to these circumstances,” Hughes added. “We believe that this agreement will contribute positively with advancing licensing negotiations with other companies and advancing our technologies into this market.”

If nothing else, the settlement will give lawyers on both sides a much-needed break.

In 1999 and 2000, Rambus began claiming that it owned certain fundamental rights to both SDRAM and DDR DRAM technology, as part of its own Direct Rambus technology patents that it had previously convinced the JEDEC industry standards body to adopt. When DRAM manufacturers began shipping DRAM based on the two specifications, Rambus began asking for royalties. Companies like Hitachi and Samsung settled, rather than engage in protracted legal hostilities. Others, like Infineon, Hynix Semiconductor and Micron Technology, chose to go to court instead.

Although companies like Micron and Infineon argued that Rambus’ actions were illegal, a federal appeals court in 2003 found that the company’s actions were within the scope of JEDEC’s bylaws. The Supreme Court then refused to hear the case.

The appellate ruling also survived a similar hearing by the Federal Trade Commission, which also found that Rambus’ actions were within the letter of trade law.

The settlement will also exempt both Infineon and its former parent, Siemens, from an antitrust lawsuit filed by Rambus. In it, Rambus alleged that all four companies had colluded to prevent the Rambus memories from gaining a foothold in the market. In September, Infineon agreed to plead guilty to a single count of price fixing. Samsung has placed aside a $100 million reserve in case of adverse litigation, and one analyst on the conference call indicated that Hynix has also set aside nearly $350 million in case of litigation.

Separately, Rambus said that it expects its quarterly revenue to be lower than expected, driven by greater-than-expected litigation costs. For the current quarter, Rambus expects to report revenue of between $37 million and $38 million, lower than the range of $38 million to $42 million released at the end of the January quarter. Spending will be between $33 million and $36 million, due to the litigation costs.

At 11:30 ET, Rambus’ stock reached $17.20, an increase of $4.08 or 31 percent. The stock closed at $17.03, up $3.91 or 29.8 percent.

Editor’s Note: This story was updated at 6:42 PM EDT with comment from Rambus’ Hughes and a Rambus company spokeswoman.